Greenspan: Be Wary of Net Stocks

"As you move closer and closer to retirement, you move to less and less risky assets," Greenspan told lawmakers on Wednesday. "If you have everything in equities, if you have everything in Internet stocks, you're in real trouble."

"It's a question of how you manage the potential portfolio," he added, referring to the issue of how much risk was associated with individuals investing in stocks for their retirement.

Greenspan, the most powerful figure in American finance, was testifying before a House subcommittee at a hearing on proposals to reform the Social Security system.

Stocks associated with the Internet and technology are volatile and have reached high levels recently, in part because of interest in electronic commerce.

The technology-weighted Nasdaq composite was off 18.02 points at 2241.01 in late Wednesday trading.

Greenspan issued a warning on broader stock levels when he testified to a Senate committee two weeks ago, saying he had concerns over market levels.

In December 1996, he sent global markets into a famous tumble when he brought up the possibility of "irrational exuberance" among investors. The Dow Jones Industrial Average, trading on Wednesday afternoon at around 9,270, is currently about 2,800 points higher than when Greenspan made those remarks.